Is the Eth ETF launch a “sell the news” scenario?

ethereum spot exchange-traded funds will debut on July 23, following the SEC's rule change more than two months ago.

According to a eth-etf-be-sell-the-news-event” target=”_blank” rel=””>report According to Kaiko, the initial inflows into these exchange-traded funds (ETFs) will likely impact the price of ethereum (eth). However, whether the effect will be positive or negative remains to be seen.

“The launch of futures-based eth ETFs in the US late last year was met with disappointing demand,” said Will Cai, head of indexes at Kaiko. “All eyes are on the launch of spot ETFs with high hopes for a rapid accumulation of assets. While the full demand picture may not be known for several months, the eth price could be sensitive to the inflow figures in the early days.”

Several ethereum ETFs from BlackRock, Fidelity, Bitwise, VanEck, 21Shares, Invesco, Franklin Templeton and Grayscale are scheduled to begin trading on July 23.

What do we expect from ethereum ETFs today?

We expect them to start trading tomorrow. That means we should see a series of filings on the SEC site today saying that the ETF prospectuses have gone into effect. Probably after or near the close of the market. Here are the entrants in the race: photo.twitter.com/AkBxEjBRvv

—James Seyffart (@JSeyff) twitter.com/JSeyff/status/1815395664051818873?ref_src=twsrc%5Etfw” target=”_blank” rel=””>July 22, 2024

The influx of money could lead to a surge in eth, even though futures-based eth ETFs received a lukewarm reception last year. There is cautious optimism about the asset buildup of spot ETFs and how it might reflect the price of eth.

eth prices briefly spiked in May following the approval of a spot ETF, but have since trended lower. At $3,500, eth is facing a crucial supply wall.

Grayscale eth ETF Fees

Grayscale, a major player in the cryptocurrency sector, plans to convert its ETHE trust into a spot ETF and introduce a mini-trust with an initial investment of $1 billion from the original fund. Grayscale's fee on ETHE will remain at 2.5%, much higher than its competitors.

Most issuers will offer fee waivers to attract investors, with some waiving fees for six months or a year or until assets reach between $500 million and $2.5 billion. This fee war reflects the fierce competition in the ETF market, prompting ARK Invest to drop out of the eth ETF race.

This echoes Grayscale’s bitcoin (btc) ETF strategy, where they maintained high fees despite competitive pressures and sell-offs.

Fountain: eth-etf-be-sell-the-news-event” target=”_blank” data-type=”link” data-id=”https://research.kaiko.com/insights/will-the-launch-of-spot-eth-etf-be-sell-the-news-event” rel=””>Dock

According to Kaiko, Grayscale’s decision to keep its fees high could lead to ETF outflows, resulting in liquidation prices, similar to the post-conversion performance of its GBTC.

ETHE’s discount to net asset value has narrowed recently, indicating traders’ interest in purchasing ETHE below face value to redeem at net asset value after conversion for a profit.

eth ETF Volatility

Moreover, eth’s implied volatility has increased in recent weeks due to a failed assassination attempt on Donald Trump and President Joe Biden’s announcement that he will not run for president again. This reflects traders’ nervousness about the upcoming ETF launch.

According to Kaiko, contracts expiring at the end of July saw volatility rise from 59% to 67%, indicating market anticipation and potential price sensitivity to initial inflow figures.